PLA Requirement Costs Southern California Taxpayers

0 February 28, 2014  School Construction, State & Local Construction

In a story we can file under “no surprise here,” we learned earlier this week that the PLA mandate on the Rancho Campana High School caused the budget for the project to come in higher than expected. The Oxnard Union High School Board in Ventura, Calif., voted to approve approximately $58 million for the construction of this project, which is about 20 percent more than board members anticipated prior to opening bids for the project.

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Numerous studies show PLA mandates frequently increase construction costs by 12 percent to 18 percent, so the Rancho Campana High School experience is in line with the research.

Here are the highlights from the Ventura County Star’s coverage, with our emphasis added:

The Oxnard Union High School District will likely pay about $58 million for the construction of Rancho Campana High School, about $10 million more than anticipated.

A union-friendly labor agreement and a tight construction timeline are factors in the increased costs, school officials say.

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Trustee Gary Davis said he thought the construction cost would be under $50 million, not $58 million.

“It’s certainly a staggering amount,” Davis said. “That’s a setback. For this board member, anyway.”

Davis wondered how much the school would cost if the district were not on a tight timeline.

Project manager Terry Zinger said his “gut feel” is that the district will pay $1.5 million more under a tight time frame. According to Zinger, the project labor agreement was the main reason why construction costs are higher than anticipated.

Approved by a divided school board, the project labor agreement sets a goal for the hiring of local subcontractors while requiring nonunion workers to pay union fees. Proponents say the agreement is the best way to ensure Ventura County residents are hired for the project and that workers’ rights are protected. Opponents say the agreement increases the cost of the project.

Zinger said with the agreement in place, subcontractors might have refused to bid or placed a high-priced bid. But Trustee Steve Hall, who voted for the agreement, said that theory is subjective and it’s possible some subcontractors lowered their bid because of the agreement.

“That’s possible,” Zinger said. “I’m just going on my 40 so years of experience.”

This story should not surprise anyone. This is a textbook example of how PLAs impact the cost of school construction. It also shows how clueless politicians are sometimes willing to overlook facts and basic economic theory to justify the mandates. There is no question that PLA mandates reduce competition for public construction projects and increase construction costs for taxpayers.

To learn more about the negative impact of PLA mandates on school construction, visit our sister site: www.buildmoreschools.com

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